MECHANICAL CONTRACTING PVF
Global steel production increase foretells worldwide expansion
BY MORRIE BESCHLOSS CONTRIBUTING WRITER Steel, and the myriad products dependent on that
global metal for construction, fabrication and maintenance, in all forms of endeavor, has been a perennial weather vane of the world’s industrial development direction. Along with copper, which signals the direction of
residential and light commercial construction, the overabundance, shortage or prices of these metals almost always foretell what to expect f rom industrial and ancillary product growth in the months ahead. If these indicators are valid, as I believe they are, the global economy as a whole is on the
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The long-term outlook is looking equally bleak. Whereas housing had long been considered the prime asset for most Americans, it has now taken on the stigma of a liability.
cusp of an accelerated growth in the second half of 2011. However, it is now China, rather than the U.S., which
has become the main center of world steel production. Whereas the U.S. produced 150 tons of steel in 1950, it is hard to come up with even one-third of that amount today. China, on the other hand, has assumed the role of steel production dominator by having become the undisputed global leader of steel production, with India and Russia following in second and third places. In fact, Arcelor Mittal, the international conglomerate
formed in 2006 between Arcelor and Mittal is the world’s leading corporate owner of steel production companies. The company’s CEO is India’s Lakshmi Mittal, but the company is headquartered in the European nation of Luxembourg. U.S. Steel, at one time synonymous with America’s
corporate, as well as steel, dominance in production and distribution, with its present stock price underwater, is poised for a rebound, both in production, revenues and equity value potential. Although modern, highly accelerating global
technology has reduced global steel to a more humdrum commodity, that mighty metal and its supporting iron ore mining facilities are an indicator of a nation’s
industrial strength. That is why such huge iron ore mining enterprises as Australia’s Rio Tinto are in today’s economic spotlight, catapulting that underpopulated southern hemisphere continent and its government capital, Canberra, into a bidding target for its natural resource firms by Chinese and other prospective world buyers. Barring further unforeseen circumstances, such as
natural calamities or further Mideast/North African geopolitical developments, experts expect global industrial activity to surprise on the upside later this year.
Housing sector stuck in deep depression The old adage known as Murphy’s Law, "What can go
wrong will go wrong," certainly applies to America’s disastrous housing market. Of all the dismal statistics that jump out at me, one
that caught my eye was that the 323,000 homes sold in 2010 comprised only 60% of sales posted in 1963, almost 50 years ago, when records were first kept. No year since has been lower. What’s even more distressing is that almost 40% of current sales were forced foreclosures. This mix brought prices down to levels not seen since the early 1990s. If the current rate prevails through 2011, the average price per house sold will constitute the sixth year in a row of new home sales decline. Because residential construction had been the
backbone of the U.S. economy’s viability since the post- World War II period, overall gross domestic product growth is destined to be tepid for months, if not years, to come. I ts ancillary effects have been felt by thousands of developers, many of them on the verge of bankruptcy. The long-term outlook is looking equally bleak.
Whereas housing had long been considered the prime asset for most Americans, it has now taken on the stigma of a liability. The large proportion of foreclosures
U.S. Steel, at one time synonymous with America’s corporate, as well as steel, dominance in production and distribution, with its present stock price underwater, is poised for a rebound, both in production, revenues and equity value potential.
bespeaks of housing abandonment, creating an unprecedented massive shift toward rental. The record low mortgage rates and attendant interest rate reduction
e Turn to BESCHLOSS on p 66
phc july 2011
www.phcnews.com
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